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Tuesday, January 31, 2017

Former Chief Administrative Deputy and Sheriff’s Uncle Also
Plead Guilty

A former Rutherford County Sheriff, his former Chief
Administrative Deputy, and his uncle have pleaded guilty for operating a
private electronic cigarette company in the county jail for personal gain and
the concealment and misrepresentation of their involvement with the business,
announced Acting Assistant Attorney General Kenneth A. Blanco of the Justice
Department’s Criminal Division and Acting U.S. Attorney Jack Smith of the
Middle District of Tennessee.

Robert F. Arnold, 40, former Sheriff of Rutherford County,
Tennessee, and his former Chief Administrative Deputy Joe L. Russell II, 50,
also of Rutherford County, pleaded guilty to wire fraud, honest services fraud
and extortion under color of official right on Jan. 18 and 20,
respectively.Arnold’s uncle, John
Vanderveer, 59, of Marietta, Georgia, pleaded guilty to attempted witness
tampering on Jan. 30.The pleas were
entered before Chief U.S. District Judge Kevin H. Sharp of the Middle District
of Tennessee.Arnold is scheduled to be
sentenced by Chief Judge Sharp on May 8, and Vanderveer and Russell are
scheduled to be sentenced on May 12 and May 19, respectively.All three were indicted in May 2016 for their
roles in the formation and operation of the electronic cigarette company,
JailCigs LLC.

In connection with their pleas, Arnold and Russell admitted
to forming JailCigs with Vanderveer in 2013; using Arnold’s official position
as Sheriff of Rutherford County to benefit JailCigs by allowing the company’s
electronic cigarettes to come into the Rutherford County jail as non-contraband
and be distributed by county employees; taking steps to disguise their
involvement in the company; and misrepresenting the benefits that Rutherford
County was supposedly receiving from JailCigs.

Additionally, Arnold admitted that he personally received
over $66,000 from JailCigs; and admitted that he lied about his income from,
and knowledge of, the company when he was confronted by local media in April
2015.Russell admitted receiving over
$52,000 in payments from JailCigs.Vanderveer, a private citizen and Arnold’s uncle, admitted to telling
the company’s Tennessee sales representative to destroy her commission sheets
so the company could provide fraudulent versions that would show the payments
going to her, rather than Arnold.Under
the terms of the plea agreement, each defendant agreed to pay restitution to
Rutherford County in the amount of $52,500.

The FBI and the Tennessee Bureau of Investigation
investigated the case.Trial Attorney
Mark Cipolletti of the Criminal Division’s Public Integrity Section and
Assistant U.S. Attorney Cecil W. VanDevender of the Middle District of
Tennessee are prosecuting the case.

A Los Angeles, California man pleaded guilty yesterday to
illegally engaging in the business of importing tobacco products, announced
Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice
Department’s Tax Division and U.S. Attorney Eileen M. Decker for the Central
District of California.

Zhi Xiong Chen, 56, of Chinatown, admitted that for nearly
five years, despite not holding a permit to import tobacco products, he used
several addresses to receive 15,128 cartons of Chinese-brand cigarettes. During
this time, U.S. Customs and Border Protection officers also stopped
approximately 9,824 cartons of Chinese-brand cigarettes at international mail
facilities in California and New York.

As part of the scheme, Chen admitted that he attempted to
evade paying more than $467,000 in federal and state excise taxes on the
cigarettes that he illegally imported.

“While Zhi Xiong Chen was illegally importing tens of
thousands of cartons of cigarettes into the United States, he was also evading
hundreds of thousands of dollars in taxes due on those cigarettes,” said Acting
Deputy Assistant Attorney General Goldberg. “Importers who obtain the required
permits and pay their fair share of taxes deserve to compete on a level playing
field. Those who try to cut corners and skirt these legal obligations should
know that they will be investigated and prosecuted.”

“From early 2011 until mid-2016, this defendant illegally
imported thousands of cartons of Chinese-made cigarettes without the necessary
permits and without paying excise taxes,” said U.S. Attorney Decker. “The
defendant’s crime not only cheated taxpayers, but also caused unregulated,
potentially dangerous products to be sold to an unsuspecting public.”

Sentencing is scheduled for April 17. Chen faces a statutory
maximum penalty of five years in prison, a period of supervised release,
restitution and monetary penalties.

Acting Deputy Assistant Attorney General Goldberg and U.S.
Attorney Decker thanked special agents of IRS–Criminal Investigation, the
Alcohol and Tobacco Tax and Trade Bureau, and the U.S. Food and Drug
Administration’s Criminal Investigations, who conducted the investigation, and
Assistant U.S. Attorney Valerie L. Makarewicz and Trial Attorney Christopher S.
Strauss of the Tax Division, who are prosecuting the case.

Albuquerque, NM - The U.S. Marshal Service for the District
of New Mexico, South West Investigative Fugitive Team (SWIFT) Task Force
comprised of the Bernalillo County Sheriff’s Office, the New Mexico Department
of Corrections, and the New Mexico State Police, apprehended Juan Rivas Jr in
an area south of Albuquerque, NM.

Juan Rivas is wanted by ATF and USMS on federal charges
stemming from allegedly selling and distributing illegal narcotics. Rivas was
also charged with Aiding and Abetting a drug trafficking deal of
Methamphetamine. Rivas (AKA P-NUT) is allegedly a South Side Playerz X13 gang
member from South East Los Angeles, CA. He has a long history of Selling drugs,
Aggravated Battery with a deadly weapon and False imprisonment. Rivas is
presumed innocent until proven guilty.